News – This Month In Coal – April 2017

This week, Vale announced it had completed the $770 million equity transaction with Mitsui & Co. Ltd. (Mitsui) associated with the divestment of part of its interest in the Moatize coal mine and in the Nacala Logistics Corridor (NLC). Vale received $733 million and the remaining $37 million will be paid at the conclusion of the project finance transaction of as much as $2.7 billion, which will help fund the project and is still expected to happen in 2017.

Cyclone Debbie struck Queensland at the end of March and rail provider Aurizon confirmed none of the four railways serving regional coal mines were in full operation while two of them were entirely out of action. The disruption will likely spark a short-term rally in coking coal prices given that Queensland produces more than half of the world’s seaborne coking coal.

Teck Resources expects coking coal sales volumes for the second quarter of 2017 to be at least 6.8 million metric ton (mt), and mining costs in the second quarter are expected to be in the range of $47/mt to $51/mt. For the first quarter, Teck realized an average price between $209/mt to $212/mt, at the higher end of its previous guidance range. Sales volumes in March improved relative to weak sales in January and February, but not sufficiently to result in sales above 5.8 million-6 million mt in the quarter. Final quarterly sales will depend on timing of shipments.

U.S. President Donald Trump signed an executive order on energy independence on March 28 that will re-evaluate former President Barack Obama’s Clean Power Plan (CPP) and lift the ban on federal leases for coal production.